LNG ship docked at dusk

WFW advises Sovcomflot on first structured ship financing funded by Russian bank

10 May 2016

International law firm Watson Farley & Williams (“WFW”) has advised long-time client Sovcomflot Group of Companies (“Sovcomflot”), Russia’s largest shipping company, on the US$339,681,000 facility from Sberbank of Russia, to finance the acquisition of three Ice-Class shuttle tankers.

According to Marine Money magazine, the deal marks the first structured ship financing done by a Russian bank, opening up a new pool of capital to Sovcomflot, and potentially the wider industry as well. It is also the largest commercial deal done by a single bank without syndication in the maritime industry.

The three 42,000 deadweight tonnage crude oil shuttle tankers, due to be delivered in 2016-2017, will form part of the infrastructure for the Noviy Port project on the Yamal peninsula in Russia. The vessels will operate on long-term charter contracts to Gazprom Neft Trading GmbH and have been specifically designed to be able to transport shipments of crude oil from an offshore loading terminal in the Gulf of Ob, Kara Sea year-round.

The WFW team that advised Sovcomflot was led by London Finance partner Patrick Kirkby, assisted by senior associate Sandy Apostolatou and partner Toby Royal, who provided specialist maritime legal advice.

Patrick Kirkby said: “WFW has a long association with Sovcomflot and we are pleased to have advised them on this key deal, which demonstrates our capabilities advising clients on project finance structured deals, and which has allowed Sovcomflot to diversify its funding sources. Perhaps even more importantly, it has also introduced a new lender, and potentially other Russian lenders, to financing in the maritime sector”.

The deal has subsequently been named “2015 Project Finance Deal of the Year” by Marine Money, which described it as: “a truly unique transaction as it opens up the Russian commercial bank universe as a potential new market for commercial shipping finance business”.